PERSONAL FINANCE / KATHY M. KRISTOF

Resolutions for the Money Taxes Take From Us

What's wrong with this picture? When this provision was "scored" for its revenue-raising abilities last April, numbers crunchers at the Congressional Budget Office assumed that the relevant T-bill rate would be 4.3% in 1995 and 4.6% in years beyond. But by the time the bill was passed in November, it was clear that these interest projections were way off. Currently, six-month T-bills pay 6.81%, which, if the change were in effect today, would obligate the Treasury to pay 5.79% rather than 4% on savings bonds cashed early.

Overall, this "revenue raiser" could cost the government $72 million each year, or $358 million over five years.

The budget office doesn't think the bloodletting will be so bad, because it believes a lot of people will cash in their bonds whenever the mood strikes without worrying about whether they might be losing money.

In fact, the office estimated that eight out of 10 holders of savings bonds would make such a costly mistake and sacrifice one to five months' worth of interest.

Nonetheless, the budget office acknowledges that the savings bond provisions are sure to cost rather than save the government money.